Q3 2018 Earnings Call

Changyou Reports Fourth Quarter and Fiscal Year 2009 Results

Fourth Quarter Total Revenues Reach a Record US$70.7 million, Up 3% Quarter-over-Quarter;
Fourth Quarter Non-GAAP Net Income Reaches a Record US$42.2 million, Up 2%
Quarter-over-Quarter;Full Year Total Revenues Increase 33% to US$267.6 million;Full Year Non-GAAP Net Income Increases 39% to US$158.1 million

Beijing, China, February 1, 2010 – Changyou.com Limited ("Changyou" or the "Company") (NASDAQ:
CYOU), a leading online game developer and operator in China, today announced its unaudited financial
results for the fourth quarter and fiscal year ended December 31, 2009.

Fourth Quarter 2009 Highlights

Total revenues reached a record US$70.7 million, an increase of 3% quarter-over-quarter and 21%
year-over-year, within the Company's guidance.

Net income reached a record US$38.9 million, or US$0.73 per fully diluted ADS1. Net income
increased by 3% quarter-over-quarter and 34% year-over-year.

Non-GAAP2 net income (i.e. excluding share-based compensation expenses) reached a record
US$42.2 million, or US$0.79 per fully diluted ADS. Non-GAAP net income increased by 2%
quarter-over-quarter and 39% year-over-year, within the Company's guidance.

Average revenue per active paying account ("ARPU") for the Company's games increased 3%
quarter-over-quarter and 1% year-over-year to RMB196.

Each American depositary share ("ADS") represents two Class A ordinary shares.

Explanation of the Company's non-GAAP financial measures and related reconciliations to GAAP financial measures are included in the accompanying "Non-GAAP Disclosure" and "Reconciliations to Unaudited Condensed Consolidated Statements of Operations."

Comprised of Tian Long Ba Bu ("TLBB"), Blade Online, and Blade Hero 2

Fiscal Year 2009 Highlights

Total revenues reached a record US$267.6 million, up 33% year-over-year.

Net income reached a record US$144.7 million, or US$2.81 per fully diluted ADS. Net income
increased 34% year-over-year.

"I am pleased that Changyou has delivered another quarter of solid results to close out an historic year,"
said Mr. Tao Wang, Changyou's chief executive officer. "In 2009, we executed on our strategies and
enhanced our brand value through a successful IPO while experiencing consistent growth in our existing
games, investing in and strengthening our game pipeline, and making various advances in game
development technologies. Our user-centric development model and commitment to building our business
for the long-term have generated record performances and have made Changyou one of the leaders in
China's online gaming industry."

Mr. Wang continued, "Throughout 2010, in addition to releasing new game content, we have several
pipeline games slated for release that we expect will further diversify our game roster and attract new users
by appealing to a variety of gamers. We believe that our pipeline games and new technologies will firmly
establish Changyou in new market sub-segments and serve as catalysts for growth."

Mr. Alex Ho, Changyou's chief financial officer, added, "Changyou's solid fourth quarter and full year
performances are a result of the successful execution of our business strategies and our continuous focus
on the in-game experience of our users. With continued growth in the operational and financial metrics of
our existing games, a robust game pipeline, industry-leading margins, rich cash flows, and a track record of
meeting our guidance targets, we continue to inspire confidence while further enhancing shareholder
value."

Fourth Quarter 2009 Operational Results

Aggregate registered accounts for the Company's games as of December 31, 2009 increased 8%
quarter-over-quarter and 41% year-over-year to 80.9 million.

Aggregate PCU for the Company's games was approximately 990,000, an increase of 9%
quarter-over-quarter and an increase of 19% year-over-year.

Aggregate active paying accounts ("APA") for the Company's games was flat quarter-over-quarter and
increased 21% year-over-year to 2.4 million.

ARPU for the Company's games increased 3% quarter-over-quarter and 1% year-over-year to RMB196,
which the Company believes is within a range that is affordable for the majority of Chinese game players.

Fourth Quarter 2009 Unaudited Financial Results

Revenues

Total revenues for the fourth quarter of 2009 increased 3% quarter-over-quarter and 21% year-over-year to
US$70.7 million.

Revenues from game operations for the fourth quarter of 2009 increased 3% quarter-over-quarter and 22%
year-over-year to US$68.6 million. The sequential increase primarily reflects the growing popularity of
our games. The year-over-year increase was mainly due to increased popularity of the Company's flagship
game, TLBB.

Overseas licensing revenues for the fourth quarter of 2009 increased 15% quarter-over-quarter and 5%
year-over-year to US$2.1 million. The increases were mainly due to increased momentum of TLBB in
Vietnam and Malaysia.

Gross Profit

Gross profit for the fourth quarter of 2009 increased 2% quarter-over-quarter and 21% year-over-year to
US$65.3 million. Gross margin in the fourth quarter of 2009 was 92%, compared to 93% in the previous
quarter and 92% in the fourth quarter of 2008. Non-GAAP gross profit for the fourth quarter of 2009
increased 2% quarter-over-quarter and 21% year-over-year to US$65.3 million. Non-GAAP gross margin
in the fourth quarter of 2009 was 92%, compared to 93% in both the previous quarter and the fourth quarter
of 2008.

Non-GAAP product development expenses increased 5% sequentially and decreased 12% year-over-year
to US$5.1 million. The sequential increase was primarily attributable to an increase in salaries and benefits
due to hiring of more game engineers. The year-over-year decrease was primarily the result of a change in
the Company's bonus program for key engineers, for whom the Company lessened cash bonuses after
share-based awards previously granted increased in value after the Company's IPO.

Non-GAAP sales and marketing expenses increased 3% sequentially and decreased 5% year-over-year to
US$9.5 million. The sequential increase was primarily due to an increase in marketing and promotional
activities for new content releases of the Company's existing games. The year-over-year decrease was
primarily because of savings in marketing and promotional spending due to the Company's optimization
of marketing campaigns in 2009 offset by an increase in salaries and benefits from the expansion of our
sales and marketing team.

Non-GAAP general and administrative expenses decreased 25% sequentially and 2% year-over-year to
US$3.1 million. The sequential decrease was primarily due to an increase in legal expenses to enforce the
Company's intellectual property rights in the previous quarter. The year-over-year decrease was primarily
the result of a change in our bonus program for management, for whom we lessened cash bonuses after
share-based awards previously granted increased in value after the IPO.

Operating Profit

Operating profit for the fourth quarter of 2009 increased 5% quarter-over-quarter and 31% year-over-year
to US$44.3 million. Operating margin in the fourth quarter of 2009 was 63%, up from 62% in the previous
quarter and 58% in the fourth quarter of 2008. Non-GAAP operating profit for the fourth quarter of 2009
increased 4% quarter-over-quarter and 36% year-over-year to US$47.6 million. Non-GAAP operating
margin in the fourth quarter of 2009 was 67%, unchanged from the previous quarter and up from 60% in
the fourth quarter of 2008.

Net Income

For the fourth quarter of 2009, net income increased 3% quarter-over-quarter and 34% year-over-year to
US$38.9 million. Non-GAAP net income increased 2% quarter-over-quarter and 39% year-over-year to
US$42.2 million. Fully diluted earnings per ADS were US$0.73, up from US$0.71 in the previous quarter
and US$0.61 in the fourth quarter of 2008. Non-GAAP fully diluted earnings per ADS were US$0.79, up
from US$0.77 in the previous quarter and US$0.64 in the fourth quarter of 2008. Net margin for the fourth
quarter of 2009 was 55%, unchanged from the previous quarter and up from 50% in the fourth quarter of
2008. Non-GAAP net margin for the fourth quarter was 60%, unchanged from the previous quarter and up
from 52% in the fourth quarter of 2008.

Cash Balances

As of December 31, 2009, Changyou had a net cash balance of US$226.9 million, down from US$312.9
million as of September 30, 2009. Operating cash flow for the quarter was a net inflow of US$46.2 million.
4 of 12 The decrease in the net cash balance is due to the payment of a US$96.8 million pre-IPO cash dividend to
Sohu.com (Game) Limited, an indirect, wholly-owned subsidiary of Sohu, during the fourth quarter of
2009. This dividend was declared on April 1, 2009, prior to the Company's IPO, and was described in the
Company's IPO prospectus.

Fiscal Year 2009 Unaudited Financial Results

Revenues

Total revenues for the fiscal year 2009 were US$267.6 million, an increase of 33% from US$201.8 million
for the fiscal year 2008.

Revenues from game operations for the fiscal year 2009 were US$259.8 million, an increase of 33% from
US$194.6 million for the fiscal year 2008. The increase was mainly due to increased popularity of the
Company's flagship game, TLBB.

Overseas licensing revenues for the fiscal year 2009 were US$7.8 million, an increase of 8% from US$7.2
million for the fiscal year 2008. The increase was mainly due to increased momentum of TLBB in Vietnam
and Malaysia.

Gross Profit

Gross profit for the fiscal year 2009 was US$250.1 million, an increase of 34% from US$187.2 million for
the fiscal year 2008. Gross margin for the fiscal year 2009 was 93%, unchanged from 93% for the fiscal
year 2008. Non-GAAP gross profit for the fiscal year 2009 was US$250.4 million, an increase of 34%
from US$187.2 million for the fiscal year 2008. Non-GAAP gross margin for the fiscal year 2009 was 94%,
up from 93% for the fiscal year 2008.

Operating Expenses

Total operating expenses for the fiscal year 2009 were US$86.2 million, an increase of 20% from US$71.8
million for the fiscal year 2008. Non-GAAP operating expenses for the fiscal year 2009 totaled US$73.1
million, an increase of 10% from US$66.5 million for the fiscal year 2008.

Non-GAAP product development expenses for the fiscal year 2009 were US$19.9 million, an increase of
5% from US$18.9 million for the fiscal year 2008. The increase was primarily attributable to a doubling of
the Company's R&D workforce in 2009 offset by changes in the Company's bonus program for key
engineers, for whom the Company lessened cash bonuses after share-based awards previously granted
increased in value after the Company's IPO.

Non-GAAP sales and marketing expenses for the fiscal year 2009 were US$39.8 million, an increase of
2% from US$38.9 million for the fiscal year 2008. The increase was primarily attributable to an increase in
salaries and benefits due to expansion in sales and marketing headcount offset by savings in marketing and
promotional spending due to the Company's optimization of marketing campaigns in 2009.

Non-GAAP general and administrative expenses for the fiscal year 2009 were US$13.3 million, an
increase of 54% from US$8.6 million for the fiscal year 2008. The increase was primarily due to the
expansion of back-office headcount and an increase in legal expenses to enforce the Company's
intellectual property rights.

Operating Profit

Operating profit for the fiscal year 2009 was US$163.9 million, an increase of 42% from US$115.4 million
for the fiscal year 2008. Operating margin for the fiscal year 2009 was 61%, up from 57% for the fiscal
year 2008. Non-GAAP operating profit for the fiscal year 2009 was US$177.3 million, an increase of 47%
from US$120.7 million for the fiscal year 2008. Non-GAAP operating margin for the fiscal year 2009 was
66%, up from 60% for the fiscal year 2008.

Net Income

Net income for the fiscal year 2009 was US$144.7 million, an increase of 34% from US$108.0 million for
the fiscal year 2008. Non-GAAP net income for the fiscal year 2009 was US$158.1 million, an increase of
39% from US$113.3 million for the fiscal year 2008. Fully diluted earnings per ADS for the fiscal year
2009 were US$2.81, up from US$2.27 for the fiscal year 2008. Non-GAAP fully diluted earnings per ADS
for the fiscal year 2009 were US$3.05, up from US$2.39 for the fiscal year 2008. Net margin for the fiscal
year 2009 was 54%, up from 53% for the fiscal year 2008. Non-GAAP net margin for the fiscal year 2009
was 59%, up from 56% for the fiscal year 2008.

Other Business Developments and Awards

Newly Licensed Game

The Company licensed and received the exclusive operating rights for Da Hua Shui Hu in China from
Firestone Technologies, a Guangzhou-based game development studio. Da Hua Shui Hu is a 2D
turn-based cartoon-style MMORPG based on Outlaws of the Marsh, one of the four great classical novels
of Chinese literature. The game is currently in closed beta testing.

The Asset's Triple A Regional Award for Best ADR Equity Deal/IPO of 2009

In January 2010, Changyou was honored as the "Best ADR Equity Deal/IPO of 2009" in The Asset's 2009
Triple A Regional Awards. The Asset magazine's annual Triple A awards recognize institutions and
individuals that have made a significant contribution to the development of the finance industry in Asia
and are highly regarded due to their rigorous assessment process. Changyou was awarded "Best ADR
Equity Deal/IPO of 2009" based on a number of factors, including the execution, size, pricing and
after-market performance of the Company's IPO.

Business Outlook

Changyou estimates total revenues for the first quarter of 2010 to be between US$70.0 million and
US$73.0 million.

Changyou estimates non-GAAP net income for the first quarter of 2010 to be between US$41.0 million
and US$42.5 million.

Changyou estimates non-GAAP fully diluted earnings per ADS for the first quarter of 2010 to be between
US$0.77 and US$0.80.

Assuming no new grants of share-based awards, Changyou estimates share-based compensation expense
for the first quarter of 2010 to be between US$3.0 million and US$3.5 million, reducing fully diluted
earnings per ADS by US$0.06 to US$0.07.

Non-GAAP Disclosure

To supplement the unaudited consolidated financial information prepared in accordance with United
States Generally Accepted Accounting Principles ("GAAP"), Changyou's management uses non-GAAP
measures of cost of revenues, operating expenses, net income and net income per ADS, which are adjusted
from results based on GAAP to exclude the compensation cost of share-based awards granted to
employees. These measures should be considered in addition to results prepared in accordance with GAAP,
but should not be considered a substitute for, or superior to, GAAP results.

Changyou's management believes that excluding the share-based compensation expense from its
non-GAAP financial measure is useful for itself and investors. Further, the amount of share-based
compensation expense cannot be anticipated by management, and these expenses are not built into the
Company's annual budgets and quarterly forecasts, which generally will be the basis for information
Changyou provides to analysts and investors as guidance for future operating performance. As share-based
compensation expense does not involve any upfront or subsequent cash outflow, Changyou does not factor
this in when evaluating and approving expenditures or when determining the allocation of its resources to
its business operations. As a result, in general, the monthly financial results for internal reporting and any
performance measure for commissions and bonuses are based on non-GAAP financial measures that
exclude share-based compensation expense.

The non-GAAP financial measures are provided to enhance investors' overall understanding of
Changyou's current financial performance and prospects for the future. A limitation of using non-GAAP
cost of revenues, operating expenses, net income and net income per ADS, excluding share-based
compensation expense, is that the share-based compensation charge has been and will continue to be a
significant recurring expense in the Company's business for the foreseeable future. In order to mitigate
these limitations the Company has provided specific information regarding the GAAP amounts excluded
from each non-GAAP measure. The accompanying tables include details on the reconciliation between
GAAP financial measures that are most directly comparable to the non-GAAP financial measures the
Company has presented.

Notes to Financial Information

Financial information in this press release other than the information indicated as being non-GAAP is
extracted from Changyou's unaudited financial statements prepared in accordance with GAAP.

Safe Harbor Statement

It is currently expected that the Business Outlook will not be updated until the release of Changyou's next
quarterly earnings announcement; however, Changyou reserves the right to update its Business Outlook at
any time for any reason.

This announcement contains forward-looking statements. Statements that are not historical facts, including
statements about the Company's beliefs and expectations, are forward-looking statements. These
statements are based on current plans, estimates and projections, and therefore you should not place undue
reliance on them. Forward-looking statements involve inherent risks and uncertainties. The Company
cautions that a number of important factors could cause actual results to differ materially from those
contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to,
the current global financial and credit markets crisis and its potential impact on the Chinese economy, the
slower growth the Chinese economy experienced during the latter half of 2008 and in 2009, which could
continue through 2010, the uncertain regulatory landscape in the People's Republic of China, fluctuations
in Changyou's quarterly operating results, Changyou's historical and possible future losses and limited
operating history, and the Company's reliance on Tian Long Ba Bu as its major revenue source. Further
information regarding these and other risks is included in Changyou's Registration Statement on Form F-1
7 of 12 originally filed on March 17, 2009 as amended through March 31, 2009, and other filings with the Securities and Exchange Commission.

Conference Call Information

Changyou's management team will host an earnings conference call today at 7 a.m. U.S. Eastern Daylight
Time, February 1, 2010 (or 8 p.m. Beijing/Hong Kong time, February 1, 2010). To listen to the conference
call, please use the dial in numbers below:

About Changyou

Changyou.com Limited's ("Changyou") (NASDAQ: CYOU) massively multi-player online role-playing
games ("MMORPG") business began operations as a business unit within Sohu.com Inc. (NASDAQ:
SOHU) in 2003. Changyou was carved out as a separate, stand-alone company in December 2007,
completed an initial public offering on April 7, 2009, and is now a leading developer and operator of online
games in China. Changyou currently operates three online games, including the in-house developed Tian
Long Ba Bu, one of the most popular online games in China, and the licensed Blade Online and Blade Hero
2. Changyou has a diversified pipeline of games with various graphic styles and themes, including the
licensed Da Hua Shui Hu, Zhong Hua Ying Xiong, Immortal Faith, Legend of the Ancient World, and the
in-house developed Duke of Mount Deer, which received an award as one of China's most anticipated
online games. Changyou's leading technology platform includes advanced 2.5D and 3D graphics engines,
a uniform game development platform, effective anti-cheating and anti-hacking technologies, proprietary
cross-networking technology and advanced data protection technology. For more information about
Changyou, please visit http://www.changyou.com/en/.